IDFC First Bank Limited

I don’ think getting in the play of defending vs accusing management is a right way for any investor, that said, management wasn’t untrue or misleading. The merger effective date with Capital First was 18 Dec 2018.

Valuations are a tricky thing to understand, at the time of merger, bank was priced at 15 times TTM earnings (Earnings yield of 6.7%) with clearly so much work to do – as anyone could have inspected IDFC’s numbers and known the pain they are in and today, once again, bank is priced at 16 times TTM earnings. Yeah some may emphasis on P/B values, but even with that an informed investor would be aware of the quality of book back then and the quality of book today.

Why am I saying all this? My mentors taught me to stay quiet, don’t get into public debates, focus on understanding business economics, do your work yourself, don’t rely on someone else’s opinion. Ensure you always always have a margin of safety – without that, do not shell out a penny of yours. etc. – But being an attendant to so many investor calls over past several years, very few stand out as dedicated to business fundamentals, being long term oriented and not giving into short term qoq mentality, yet logic driven as opposed to over-emotionally attached that could result in overseeing basic flaws in their approach. And Mr. VV has been one of them in my humble opinion

For what it’s worth. I decided to send management an email appreciating the way they:

1. Decided to address queries such as those of share price movement which no management usually entertains and a few just this quarter alone quietly asked the questioner to stick to quarterly numbers.
2. Explained the fundamentals of banking several times so even a know-nothing investor or just a spectator (or as they like to label themselves “prospective investor”) has something meaningful to take away.
3. In the heat of so much coming in from all directions, staying steadfastly focused on longer term picture of building a sustainable business – In fact someone gave them examples of predictability in ICICI numbers, perhaps they might not have recalled that Mr. V.V is an ICICI guy. Comes from same pedigree of Mr. N Vaghul, and Mr. K.V Kamath disciples – addressing queries with logic and rationale as opposed to reacting with emotions.
4. And of course, building an excellent product/service that I and my family/friends love to use interact with in our day to day lives.